I've analysed and written 60+ failed startup stories. Here are 5 mistakes that killed 99% startups:
1. Grew too fast
❌ Almost all startups died of suicide, not murder.
❌ Founders raised from VC, forced to scale, over-hired, over-expanded, and by the time they realised it, they have grown too fast with a bloated team and bloated product. 1st layoff, 2nd layoff... and died.
2. Spent too much
❌ With money raised from VC, being frugal is out of the picture.
❌ Instead, founders overpaid themselves, hired more people, moved to a fancy office, travelled around the world to speak at conferences for "networking".
3. Pivoted too slow
❌ With a bloated team and product, every decision needed to go through different layers to get buy-ins from all stakeholders.
❌ At this stage, founders ran their startups like corporates when speed and execution are everything.
❌ When shit happened, they pivoted too slow, ran out of runway, and died.
4. Unsustainable business model
❌ Profitability? Let's figure out the business model later. We're a "pre-revenue" company growing 30% week-on-week.
❌ Investors wanted to grow fast, founders followed the "growth-at-all-costs" advice.
❌ So founders paid $100 to get $1 and kept doing this until they ran out of money.
5. Lack of governance
❌ Founders received huge sums of money and didn’t know how to handle the fund and pressure to think and act rationally. Their identity was attached to the success of the companies.
❌ If they failed to raise the next round, it was failure to them. To them, it was all about the next fundraising round and the valuation target to hit.
❌ Out of desperation, founders fabricated financials and traction to show investors the hockey stick curve. When they finally got caught, whole companies collapsed overnight, employees lost their jobs, investors lost their money, startup ecosystem got damaged.
What other mistakes did I miss?
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